Belarus has Latvia on business hook

The desire of Latvia to move the focus on protection of its business-interests in Belarus makes the bilateral relations more stable.

However, in this situation Riga’s interest in democratization of Belarus is becoming less. And this naturally plays into the hands of Belarusian authorities, and goes against the hair of the Belarusian opposition, “Belorusskiye novosti” informs.

Almost immediately after entering the international scene as an independent state, Belarus showed interest in development of relations with Latvia. In December 1991 a Belarusian-Latvian declaration on good neighbourhood principles was signed in Riga. On April 7, 1992 Belarus and Latvia established diplomatic relations. In 1993 the Belarusian Embassy in Riga and the Latvian Embassy in Minsk were opened on a reciprocal basis.

Building the relations in the constructive spirit, which was taking place in the first half of the 1990ies, helped to solve the problems of demarcating the Belarusian-Latvian state border quickly. It was based on the administrative line which existed at the moment when Latvia left the USSR in 1991. The recognition of this fact by the Belarusian side was reflected in the agreement as of February 21, 1994.

In the second part of 1990ies problems the relations between Minsk and Riga blew up. They were not caused by bilateral disputes, but the general deterioration of the relations between Belarus and the European Union, which member Latvia wanted to become. There was no antagonism in the Belarusian-Latvian relations, but the political dialogue became restrained.

In 2008 there was a visible progress for the better. In February 2009 Latvian then-Prime Minister Ivars Godmanis visited Minsk, and in November of the same year – Foreign Minister Maris Riekstins. The both met with Alyaksandr Lukashenka and received special gratitude from Lukashenka “for understanding of the situation” and “a sensible, pragmatic position” in relations with Belarus.

It should be noted that the policy of the Belarusian authorities towards Latvia differed from the policy of Russia in principle. In particular, in the 2000ies the official Minsk abstained from comment on such problems as Riga’s evaluation of the outcome of the Second World War, the status of the Russian language in Latvia and situation of Russian-speaking “non-citizens”.

The political thaw had made it possible to follow to its logical end the procedure of border demarcation, which was started in May 1998. The concluding chord was signing an agreement on the junction point of the national borders of Belarus and Latvia in Minsk on January 28, 2010.

It was more difficult to solve the problem of the high cost of visas for Belarusian citizens, which emerged after Latvia joined Schengen space of the EU in 2007.

Latvian officials many times declared their readiness to ensure lowering the visa costs to the level fixed for the citizens of Russia and Ukraine (not 60 Euro but 35 Euro). However, the European structures did not listen to Riga’s arguments. However, the Belarusian authorities did not show great zeal in that. And finally, in the outcome Latvia confined itself to goodwill gestures: extending issuing entry Schengen visas to certain categories of Belarusian citizens, and a denial to collect fees for issuing Latvian national long-term visas to Belarusians.

In August 2010 Belarus and Latvia signed an agreement on small border traffic, which facilitates the procedure of crossing the border by dwellers of border territories of the two states. In March this year the agreement came into force.

In 2009 the Latvian side supported the offer to include Belarus in the EU initiative “Eastern Partnership”, having demonstrated a keen interest in realization of joint projects in the spheres of transport and energy. However, there was no considerable success achieved in the framework of the Eastern Partnership, as political discord between Belarus and the EU persisted.

The development of bilateral business-ties looked more impressive. Latvia stays in the group of the most important economic partners of Belarus.

The bilateral trade turnover in the second part of the 2000-ies was particularly striking. It exceeded $500 mln in 2006, $1 billion in 2007, $2 billion in 2008. The share of Latvia in the total turnover of Belarus with foreign states has increased from 1.8% in 2003 (before Latvia entered the EU), to 3.2% in 2008.

At the same time, the Belarusian export to Latvia considerably outbalances import from this country to Belarus. In 2008 Latvia received 6.6% of the total Belarusian export, and only 0.35% of Belarusian import.

However, Latvia was not just consuming Belarusian goods, but most notably, contributed to transporting Belarusian goods to other countries. In particular, through ports of Ventspils, Riga and Liepaja transported a great quantity of Belarusian oil products, chemical products, semi-products and carbon steel bars.

Crisis phenomena in the world economy have caused a decline in the bilateral trade. According to Belarusian statistics, in 2009 the volume of the Belarusian export to Latvia fell to $ 1.8 billion. Firstly, it was an influence of the decrease of the oil and potassium fertilizers’ world prices. In 2009 the Belarusian side stopped transporting these fertilizers through Latvia.

The situation in 2010 looked even worse. Then Belarus encountered problems with Russian oil. At that moment the Belarusian-Latvian turnover decreased to $1 billion.

Increase of Russian oil deliveries to Belarus in 2011 had a favourable influence on the state of the Belarusian-Latvian trade contacts. In particular, last year the share of Belarus in the total volume of Latvia’s foreign trade was 4%, and the share of Latvia in the total amount of Belarus’ foreign trade – 3.8%. The volume of Belarusian export to Latvia exceeded $3.1 billion, the volume of import from Latvia to Belarus was $143.6 mln. In general, Belarusian-Latvian trade turnover reached a record level.

Over the recent years the sides have not just expanded the trade ties, but investment ties as well. In particular, by the beginning of the last year, 418 joint ventures with Latvian capital were registered in Belarus. 74 enterprises were started in 2010.

Over the last five years Latvian investors have channeled to the Belarusian economy more than $700 mln. In the end of the last year more than 10 joint projects in different spheres were in different stages of realization.

Advantageous business-ties with Belarusian partners gave the policy of Riga towards Belarus dubious nature. On the one hand, Latvian politicians could not approve the total political and legal lawlessness of the “last dictatorship of Europe”, defiant denial to accept the basic European values by the Belarusian leadership. On the other hand, Riga feared that increased pressure of the EU would push Belarus closer to Russia.

At the output, a formula was created according to which the policy of Belarusian authorities was condemned ostensibly, but a possibility to proceed from image sanctions to economic ones was denied, with a reference to the fact that it would affect common Belarusians and do damage to Latvian economy.

Such an approach was clearly demonstrated in spring this year, in the context of the diplomatic war. Latvian government once again condemned the uncivilized actions of the Belarusian authorities and expressed solidarity with the approach of the European structures to the Belarusian question. Latvian Ambassador left Minsk together with ambassadors of other EU countries.

At the same time, there were rather loud voices heard in Riga who condemned the policy of sanctions, and which practically word for word coincided with the statements of Belarusian officials. For instance, director general of Latvian confederation of employers Liga Mengelsone stated: Latvia should not be afraid to be a minority in the EU as far as the Belarusian issue is considered, as in case of imposing economic sanctions it can lose about Euro 480 mln, ad Brussels is unlikely to compensate these damages.

Thus, the factor that Latvian business had established rather close ties with Belarusian enterprises and other structures, controlled by the state, is becoming more and more influential. And consequently, the desire to protect business-interest at any cost, even at the cost of cooperation with the regime of “the last dictatorship of Europe”, begins to prevail over the desire to democratize Belarus.

Such an approach suits official Minsk completely, and it could be supposed that Belarusian authorities would not exacerbate the relations with Latvia, and on the contrary, would try to use Latvian channels for communication with European structures.